She is not the only one that thinks the rule, as proposed, could dramatically compress annuities' distribution channels.

In a recent note to investors published by Fitch Ratings, analysts write that the rule could be most consequential on more complex investment products like annuities.

The rule's prohibited transaction exemptions and Best Interest Contract Exemption would require extensive disclosures of the broker dealers and insurance agents that sell annuities.

Read: DOL clarifies annuities in 401(k)s, kind of

The rule would also require anyone selling an annuity, and hoping to earn commissions on them, to obtain client affirmations that all features of the investments they are offering are understood.

Those requirements could "burden the sales process and hurt volumes," write Fitch's analysts.

"Annuities are a tough sell in the best conditions," explained Doug Meyer, an insurance analyst at Fitch and one of the authors of the paper.

"With some products you're asking clients to part with significant savings up front.  And a lot of annuities can be complicated products. Those are real challenges for insurance companies as is. The DOL's rule would only make the sell more difficult," added Meyer.

The DOL's proposal specifically calls out variable annuities, which combine income guarantees with mutual fund-like investment features.

In testimony before Congress, Labor Secretary Thomas Perez sited the case of a retired couple whose advisor steered their entire life savings into variable annuities, which came with high annual fees—4 percent according to Perez's testimony—and severe surrender fees to discourage reinvesting the principal. The couple in Perez's example lost $50,000, he said, while the advisors made off with some of the healthiest commissions available to in the industry.

O'Brien has a problem with that example used by Perez and the DOL.

"The DOL treats that circumstance as a fiduciary breach because of the fees in the variable annuity, but they don't consider the income features in the product," she said.

For however conflicted the advisors may have been in the case sited by Sec. Perez, O'Brien fears the prohibited contract exemptions in the DOL's rule are so "onerous" that they would move the advisory industry to a fee-based model of compensation.

That would affect not only existing distribution channels for variable annuities, which are regulated by the SEC, but for all annuities, which are sold through broker-dealers who are compensated on commission.

"Clearly, there is predisposition by the DOL that any compensation other than fee-based advice creates a conflict of interest," said O'Brien.

If she is correct in assuming the DOLs' rule would force broker-dealers to a fee-based model, the impact could be devastating to insurance products' distribution channels.

O'Brien said $80 billion of fixed-annuity products were sold in 2014, half of which through investors' IRA accounts.

That impact on annuities would come as other areas of government have posted regulations facilitating the greater availability to some annuities through 401(k) plans.

Last year, the Department of Treasury issued regulations paving the way for greater adoption Qualified Longevity Annuity Contracts in retirement plans. Carriers responded by making the contracts available to IRA investors; at least one has announced new products for 401(k) investors.

The DOL also issued new guidance recently clarifying 40(k) plan sponsors' fiduciary obligations to monitor annuity offerings, ostensibly to encourage further consideration of the products.

And a bi-partisan working group on the Senate Finance Committee recently recommended tax relief on annuity income to help encourage retirees' adoption of guaranteed income products for retirement.

Those conflicting efforts suggest some cognitive dissonance on the part of regulators to O'Brien. In some contexts regulators are pushing wider adoption of annuity options in retirement planning while the DOL attempts to pass a rule that she says is certain to limit their availability.

To O'Brien, that also shows ignorance of the regulatory process governing fixed, immediate, deferred and indexed annuities, which are not regulated by the SEC or FINRA, but by state insurance regulators.

"I completely question the DOL's understanding of the regulatory schematic of insurance products," she said. "It's clear they don't understand the suitability review process, or the liability carriers have in assuring on the right investors get the products."

O'Brien points to what she says is called the Gold Standard of suitability review, which the National Association of Insurance Commissioners has established, and which as been adopted "almost verbatim" in 36 states, she said.

"We think the standard protects the consumer more than any other standard—including the fiduciary standard," reasoned O'Brien. "And it holds the insurance carrier liable for any unsuitable annuity recommendation."

For starters, there are two levels of suitability firewalls, first at the agent or broker level, and then again at the carrier level.

And those suitability reviews happen before a sale is made. "While the fiduciary standard does require and on-going duty of care, typically a breach is not realized until after a loss is realized," she said.

That means insurance products' suitability is more rigorously vetted before the sale, thinks O'Brien.

Another regulation distinct to insurance products is what is known as a "free look period." Depending on the state, consumers have 10 to 30 days to review the investment after the sale is made. If they have a case of buyer's remorse, they are free to return the product, without a loss.

Asked if insurance agents or broker-dealers are required to inform consumers of free look periods, O'Brien said no, they are not. The option is articulated in investment prospectuses, she said. Requiring agents and broker to communicate as much is something O'Brien and other annuity advocates may suggest to the DOL in comments, she said.

She also argues that before an agent or broker can sell any annuity, they must undergo specific product training at the carrier level.

That is distinct from the licensing regulations governing securities sales, which do not require specific training on specific products, say, for instance, relative to Vanguard's Wellington fund, or any other specific securities product, according to O'Brien.

"No where in the mutual fund world is there such a requirement," she said.

Ultimately, all sales are subject to a 13-point suitability review, which most carries have adopted throughout all states.

Questions regarding the client's total assets are reviewed to gauge the appropriateness of the amount of assets to be annuitized. Their age, investment horizon and risk tolerance are also measured in a questionnaire at the point of sale, and then again vetted at the carrier level prior the authorization of the sale.

O'Brien said data on how many applications are rejected based on unsuitability is not available, but that satisfaction with annuities is "very high."

The bottom-line for O'Brien is that the DOL's rule would create a "jurisdictional jump-ball" that would confuse consumers as to where to go for relief, given that the DOL does not have an existing enforcement division.

The existing processes for annuity consumers via state departments of insurance is more efficient than would be channels through the SEC and Finra, which O'Brien says are already underfunded and overstretched.

"There is ample evidence those arbitration processes are flawed," she said. "The DOL's rule would only create more mess."

O'Brien's primary concern is that the DOL's rule would restrict 401(k) assets from being rolled-over into fixed or deferred annuities, necessary she and others think to fend the longevity risk facing baby boomers.

"That's too important of an issue to not factor when considering the impact of this rule," she added.